Brazil c.bank slashes 2009 GDP growth to 0.2 pct

SAO PAULO, Dec 22 (Reuters) - Brazil's central bank slashed on Tuesday its forecast for economic growth this year but raised slightly its estimates for inflation in 2009 and 2010, underscoring expectations that a recovery in Latin America's largest economy will pressure consumer prices.

Gross domestic product should expand 0.2 percent in 2009, compared with a forecast for 0.8 percent growth made in September, the bank said in its quarterly inflation report.

Brazil is forecast to grow 5.8 percent in 2010, the bank said in its first estimate for GDP next year.

In the report, the bank raised its estimate for the IPCA consumer price index to 4.3 percent this year from 4.2 percent. The central bank forecast inflation at 4.6 percent in 2010, compared with a previous estimate of 4.4 percent.

The central bank, which uses the IPCA index as a guide when setting interest rates, has a 4.5 percent annual inflation target for 2009 and 2010, plus-or-minus 2 percentage points.

(Reporting by Elzio Barreto and Guillermo Parra-Bernal, editing by Mike Peacock) Keywords: BRAZIL ECONOMY/FORECASTS ([e-mail]; [phone]; Reuters messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.